HONG KONG (Nikkei Markets) -- Asian shares advanced Monday amid bets that the U.S. Federal Reserve later this week will likely reiterate that it is unlikely to raise interest rates anytime soon.
The Nikkei Asia300 Index of companies outside Japan advanced 1% to 1,329.99, building on last week's 2.4% climb. Chinese companies once again paced the advance on the gauge amid optimism over U.S.-China trade and policy support from Beijing. The Shanghai Composite jumped 2.5% and the Hang Seng China Enterprises Index, a gauge of mainland companies listed in Hong Kong, added1.4%.
Regional equities were buoyed by positive Wall Street cues and falling Treasury yields. The S&P 500 Index advanced Friday to round off the biggest weekly gain in four-and-a-half months, while the 10-year U.S. yield closed at the lowest since early-January. The fall in the 10-year U.S. borrowing cost to near 2.59% came on the back of a weaker-than-expected U.S. industrial output. Manufacturing output in the world's largest economy declined by 0.4% on-month compared with expectations for a 0.3% increase.
The fall in U.S. yields, notwithstanding robust risk appetite, comes ahead of the two-day meeting of the Fed. On Wednesday, the central bank is expected to leave rates unchanged and could possibly further cut its forecast for rate increases amid an uncertain growth outlook and tame inflation.
The Fed's interest rate projection, or "dot plots," is expected to show that it may increase interest rate once this year, down from two in December. The expectations of the downward adjustment come amid repeated comments by Fed officials that muted inflation allowed them to be patient on rates. Investors will further focus on the Fed's plans for its balance sheet runoff after it indicated at the last meeting that it is prepared to adjust their current policy.
"The Fed needs to follow up its earlier dovish policy guidance with a significant cut to its December 2018 dot plot," ANZ Research said in a note. "Our view is that the Fed will leave one dot/hike in the 2019 and 2020 period. We would take this as a signal that it is done with this tightening cycle and that the fed funds rate is within the realm of neutral."
Mainland property developers were among the top performers on the A300 Index on Monday. China Overseas Land & Investment jumped 7% and China Vanke advanced 7.1%. Outside of the A300 index, China Evergrande Group climbed 5% and China Resources Land jumped 9.1%.
Hong Kong shares of Chinese pork producer WH Group added 5.4%. The company on Friday reported a 4% decrease in 2018 net profit. Morgan Stanley said in a note that despite a 29% share price rally year-to-date, they see further upside amid higher possibility of better returns in WH's overseas business in 2019.
Ping An Insurance Group added 1.4% after the insurer reported a 6.6% rise in life and health insurance accumulated gross premium income for January and February.
China Eastern Airlines rose 1.2% after reporting a 10.7% increase in the number of passengers carried in February.
Maruti Suzuki India fell 2.6%. Business Standard, citing sources familiar with the matter, reported that India's biggest passenger car maker had cut production by 26.8% amid slowing demand.
Singapore Airlines advanced 0.3% after saying that total number of passengers carried in February increased by 6.8% on-year at 2.8 million.